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PERFECT COMPETITION AND EFFICIENCY: Perfect competition is the idealized market structure that achieves an efficient allocation of resources. The conditions of perfect competition, including (1) large number of small firms, (2) identical products sold by all firms, (3) freedom of entry into and exit out of the industry, and (4) perfect knowledge of prices and technology, ensure that perfect competition efficiently allocates resources. This is in fact the purpose of perfect competition: a market structure that illustrates perfection, the best of all possible resource allocation worlds. The real world falls short of this perfection.
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ECONOMIC SYSTEM The assorted institutions that society uses to answer the three basic questions of allocation and address the fundamental problem of scarcity. Another, more popular term for economic system is economy. An economy, or economic system, is the structural framework in which households, businesses, and governments undertake the production and consumption decisions that allocate limited resources to satisfy unlimited wants and needs.
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BROWN PRAGMATOX
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Today, you are likely to spend a great deal of time lost in your local discount super center wanting to buy either a large green chalkboard shaped like the state of Maine or a replacement battery for your pocket calculator. Be on the lookout for telephone calls from long-lost relatives.
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Ragnar Frisch and Jan Tinbergen were the 1st Nobel Prize winners in Economics in 1969.
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"Don't judge each day by the harvest you reap but by the seeds that you plant. " -- Robert Louis Stephenson, writer
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SSRN
Social Science Research Network
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